An Ontario woman says she lost a $2,000 deposit after she bought a used car and then changed her mind.

“My husband was under the impression there was a cooling off period and through this experience we found out that there wasn’t,” Charnell Iweze of Brampton, ON told CTV News Toronto.

A “cooling-off period’ is a period of time following a purchase when the buyer may choose to cancel a purchase or contract, or return goods which have been supplied, and obtain a full refund.

If you ever sign a contract in your home to buy something and change your mind you have ten days to cancel the agreement for any reason.

But if you’re shopping for a new or used vehicle there is no cooling off period once an agreement is signed which many people don’t know

Iweze said she and her husband had been considering a move to Alberta and wanted to buy a vehicle here and have it shipped out west.

“We are exploring our options about moving to Alberta,” said Iweze.

Iweze found a 2009 Dodge Journey with a selling price of $6,800. She decided to buy it, signed a contract and put down a $2,000 deposit.

But after she put down the payment on the vehicle she said she found out the cost of shipping the SUV out west was going to be too expensive.

“We put down a deposit for the car, but we let them know we would like the deposit back and they said they are keeping the entire amount,” said Iweze.

Iweze said she was unaware she couldn’t cancel the contract, and didn’t know there is no cooling off period when it comes to motor vehicle contracts in Ontario.

“We do not have a cooling off period in this province for vehicle sales,” said Maureen Harquil, CEO of the Ontario Motor Vehicle industry Council (OMVIC).

OMVIC oversees car dealers in Ontario and once you sign a contract to buy a vehicle it is a legally binding agreement and the dealership may decide to keep your deposit if you don’t follow through with the purchase.

“That’s why when you’re going in to sign that bill of sale and purchase or lease a vehicle it says right on the contract all sales are final and it is in Ontario,” said Harquil.

Iweze feels there should be a cooling off period for vehicle sales and is still hopeful she’ll get all or some of her deposit returned.

A dealership may decide to return a deposit to show goodwill as maybe you’ll be their customer in the future, but they don’t have to.

The best advice is to be extremely careful signing any contract for a vehicle unless you’re absolutely sure you want it.

Under Ontario law, there is a 10 day cooling off period when you sign contracts in your home, pay in advance to join a fitness club or purchase a timeshare. There is also a two day cooling off period if you get a payday loan. 

 

Foran, P. (2022, December 14). Ontario woman loses $2,000 deposit when she decides not to buy a car. Toronto. Retrieved March 31, 2023, from https://toronto.ctvnews.ca/ontario-woman-loses-2-000-deposit-when-she-decides-not-to-buy-a-car-1.6195218

Continuing to work with our friends and colleagues at the Used Car Dealers Association, DesRosiers Automotive Consultants once again reached out to the used vehicle retailer community. Over 400 UCDA members responded to our survey with both independent dealers and the used vehicle arms of franchised new vehicle dealers offering their perspectives on the used vehicle market in 2022 and in the months to come. From a sales volume perspective, 2022 was not an easy year for used vehicle dealers with volume declines evident for both franchise and independent dealers. “Looking forward, many in the community are hopeful volumes will recover in light of improvements in supply alongside some moderate price declines” commented Andrew King, Managing Partner at DAC. He continued, “However whether the hopes for improved volumes will hold up in light of a weakening economy and improved new vehicle availability remains to be seen.”

UCDA members were surveyed regarding their sales volumes over the past four years to offer some context for the performances seen in 2022. For new vehicle dealers, used vehicle sales dropped in 2022 to just below pre-pandemic levels on average. For used vehicle dealers, sales saw a decrease in 2022 as well although the overall average of 160 units settled above the average of 157 cited for 2019.

When asked about their sales expectations for 2023, both franchised new vehicle dealers and independent used vehicle dealers were optimistic. New vehicle dealers cited an expectation of 308 units sold on average for this year, rising well above the levels of the last four years. Similarly, used vehicle dealers expect to sell an average of 186 units, also well above the past four years. Achieving such lofty goals may prove challenging given industry dynamics, but for now the optimism amongst respondents was widespread.

When asked about supply and the sourcing of vehicles—a major point of concern in recent years—dealers were somewhat split. The largest portion of both new and used vehicle dealers noted that sourcing of used vehicles improved in the second half of 2022, at 43.7% and 43.8% respectively. However, 38.3% of used vehicle dealers saw their situation get worse with 32.2% of new vehicle dealers noting the same thing.

To an extent, this split in opinion followed into the question of used vehicle prices. Franchised new vehicle dealers overwhelmingly noted that used vehicle prices decreased in the fourth quarter of 2022 with 66.7% of responses indicating as such. For independent used vehicle dealers, a slim majority of respondents noted prices increasing for used vehicle sales with 34.4% citing that prices decreased. On average between the two groups, 47.4% of responses indicated dropping prices, 38.6% indicated rising prices, and 14.0% indicated no change.     Newsletter: “Used Vehicle Update – Volumes Fall in 2022 as Sourcing Improves Marginally”, DesRosiers Automotive Consultants Inc. March 7th, 2023. More information on these numbers can be found in the DesRosiers Automotive Reports published by DesRosiers Automotive Consultants Inc., or contact Daniel Azarov at daniel@desrosiers.ca. Copyright © 2023 DesRosiers Automotive Consultants Inc., All rights reserved.

Will car prices go back to prepandemic levels any time soon? My partner would like to trade in our five-year-old SUV for something new, but it looks like we’d have to wait months for a new vehicle. With new and used prices still so high, everyone is telling us that it’s a terrible time to buy. I think we should hold on to what we have for the next couple of years. Our SUV is fine, so we don’t urgently need to switch. – Caroline, Montreal

While the new and used car market is slowly cooling, it could take years to see a significant drop in prices – and they may never return to prepandemic levels, an industry analyst said.

“Looking at the forecast four or five years from now, it will be coming down every year, but it’s gradual,” said Daniel Ross, senior automotive analyst at Canadian Black Book, a Markham, Ont.-based company that provides vehicle valuations. “It’s not likely to get to the levels we had seen before the pandemic.”

As automakers cut production of new cars because of a worldwide microchip shortage, buyers who were facing empty lots and lengthy waits for new vehicles turned to used cars instead. In 2021, used car prices went up by an average of 40 per cent, Ross said.

In the past four or five months, used car values have dropped by about 10 per cent, on average. That is partly because higher interest rates are beginning to curb consumer spending, Ross said.

Demand for used cars has declined – though there are still few cars to choose from on many dealer lots – mostly because of the increased cost of borrowing and consumer frustration with high prices.

But that doesn’t mean all used cars are significantly cheaper than they were this time last year, Ross said.

“We’ve seen smaller cars hold their value better while larger cars have seen a higher decline,” Ross said.

There is still strong demand for smaller SUVs and compact cars because the “entry price is cheaper” and they tend to have better gas mileage, Ross said. They’re cars for people who don’t want to spend $40,000 or more on an SUV.

For instance, we looked at national listings on Autotrader.ca, a large online auto marketplace, for the 2017 Honda Fit. The small hatchback had an original suggested price of $15,050 to $23,010. But right now, used models – including several with more than 125,000 kilometres on them – range between $15,795 and $26,380. That is more than the six-year-old cars cost when brand new.

No real deals any time soon?

While automakers could slowly start to get enough parts toward the end of this year to increase car production, they won’t immediately be able to catch up to demand, Ross said.

Plus, with fewer cars being built over the past two years, expect a shortage of used cars from model years 2021, 2022 and 2023.

“We’re starting to edge our way out of this mess, but we’re still seeing issues producing heavy volumes and that will tie into used volume down the road,” Ross said. “We’ve already had two years of really low [production] volume and that means the used market is going to have a suppressed amount of volume three, four and five years from now.”

That shortage will keep used car values elevated and keep demand relatively high – even with these high interest rates, Ross said.

As manufacturing costs have gone up because of the parts shortages, new car prices have been climbing, too. Most manufacturers have been raising suggested prices every year – or even several times a year, Ross said.

“At the high end, we have seen as much as a $10,000 increase in suggested price from one year to the next,” Ross said. “Anecdotally, I purchased a new car in November and the price has already gone up $600 just since then.”

Also, with interest rates so high, it will cost you more to finance a new vehicle.

So, unless you need a car urgently – say, if your car was damaged beyond repair in a crash – it’s probably better to wait, Ross said.

Spending money on service or repairs that will keep your current car on the road longer is “probably the smartest play” for now, he said.

“But our outlook is positive,” he said. “Buyers should have more negotiating room in the next coming years.”

 

Tchir, J. (2023, January 22). Is now a good time to buy a new car, or will prices go down in 2023? The Globe and Mail. Retrieved January 27, 2023, from https://www.theglobeandmail.com/drive/mobility/article-is-now-a-good-time-to-buy-a-new-car-or-will-prices-go-down-in-2023/

Finding affordable and quality vehicles has been difficult for the last couple of years — be it due to semi-conductor shortages or supply chain issues — and according to some industry experts, the Canadian auto market will continue to reflect past trends for most of 2023 before things ease up a bit for consumers.

“We’re in probably year two of a semiconductor shortage that is causing automakers to make fewer cars than they can. And because of that, there’s a squeeze in supply and it’s been pushing prices up,” Flavio Volpe, president of the Automotive Parts Manufacturers Association, told Global News.

The vehicle supply shortages began at the start of the COVID-19 pandemic when demand was forecast to dwindle significantly.

Supply shortage

Gerry Duffy, who teaches supply chain management and logistics at the Southern Alberta Institute of Technology, told Global News last year that when demand picked up for vehicles, supply just couldn’t keep up.

“A lot of the automotive industry is still struggling to get their hands on enough semiconductor material in order to make all of the components that they require to put their cars together,” said Duffy at the time.

The tiny semiconductor chips that have been in short supply are extremely essential — they account for safety functions in vehicles like airbags and brakes, as well as bonus features like GPS or touchscreen entertainment systems.

The shortage of new vehicles also led to a hike in price for the ones that were readily available on lots. Duffy said a quick turnaround time meant a significant uptick from the manufacturer’s suggested retail price (MSRP).

There was an “unprecedented demand for used cars,” said Volpe.

The average price of a used car in Canada now is more than $35,000 — a nearly 50-per cent increase over a year’s time, according to a December report by the Canadian Black Book.

“For the first time in history, the value of used cars has gone up…when usually it’s the most depreciating asset that a consumer can buy,” Volpe said.

Mark McMullenn, the general manager of Mark Wilson’s Better Used Cars in Guelph, Ont., told Global News in April that after his 2019 Ram 2500 was sold to a client for $41,900, McMullen bought it back months later for $2,000 more, despite the client adding 80,000 km to the odometer.

He was then approached by another Onatrio dealer who offered to purchase the Ram at a value of $50,000.

“This is historical. This has never happened,” said McMullen, who manages a business that dates back to 1961. “Never could you buy a vehicle and drive it, and it actually appreciates.”

What to expect from the market?

According to the latest December report by Statistics Canada, sales of motor vehicles fell 3.2 per cent to $3.4 billion in October from last month as lack of materials and microchip shortages continued to plague several auto manufacturers.

“Most experts are predicting that used car prices are going to drop 10 to 20 per cent in 2023. So, if I was advising someone who is buying a car right now, if you have a used car, a newish used car, this is the peak value you’re ever going to get for it on a trade end,” said Volpe.

Contrary to what Volpe suggests, Shari Prymak, senior consultant at Car Help Canada, doesn’t think it’s a good time to be selling used cars.

“A lot of dealerships were struggling for inventory for a long time because of the car shortage. And now we’re seeing a slowdown in terms of used car sales,” said Prymak.

He says dealerships are now likely going to be stuck with cars that they may have overpaid for, and they might have to reduce pricing in order to move them off their lots.

“I think it is going to be a hard time to sell used cars and even sell new cars to some degree because we’re seeing interest rates going up and because interest rates for new car loans and used car loans have gone up by at least a few percentage points, a lot of buyers who intended to buy a few months ago or ordered a car a few months ago may no longer be able to do so because they can’t afford the payments anymore,” said Prymak.

As a result, he thinks there are going to be cancellations of orders in the coming months, which will lead to dealerships seeing slower sales.

Volpe is optimistic and expects prices of new cars to plateau and come down a bit in the coming months.

“I think what consumers can look forward to in 2023 is that we’re going to solve the semiconductor shortage globally, probably in the third and fourth quarter,” said Volpe.

“So that means new cars are going to be made at the capacity of the carmakers actually have. There will be a lot more choice, a lot more inventories,” he added.

Prymak, on the other hand, doesn’t expect any significant changes for the market in 2023.

“The environment that we have right now for car buyers, it’s going to continue this way for most of the new year,” said Prymak.

Expectations will have to ‘change’

Prymak explains that just like in 2022, people can expect not to be able to buy a new car right off the lot from a dealership.

“More often than not, you have to order a car and wait anywhere from a few months to several months for that car to arrive,” Prymak said.

He also says that there’s no longer going to be a best time of the year or month when consumers can get better deals or rebates because, with the major shortage the car markets are experiencing, “these things no longer exist.”

“You can no longer save money by purchasing a car that’s a lightly used one,” said Prymak. “More often than not, lightly used cars cost almost as much as a brand-new car.”

And, that’s because there’s no wait time and consumers can get it right away, he explained.

“The car market has completely changed, and your expectations have to change as well. And you have to understand these things before you shop (or) go to a dealership,” said Prymak.

Is the future electric?

Cara Clairman, president and CEO of Plug’n Drive, a non-profit encouraging electric vehicle use, told The Canadian Press last week that the toughest part of promoting the change from gas-powered vehicles is availability.

“Long waiting lists are definitely discouraging consumers that are ready to make the switch,” she said. “And if we all agree that we’re in a climate emergency, we need to help consumers make the switch as soon as possible.”

Prymak says that the transition to electric cars is “going to be very slow for sure.”

“Electric cars are next to impossible to buy. Most of them have a minimum waiting period of, I would say, eight to 12 months if not longer. Secondly, they’re extremely expensive,” he said.

Prymak explains that most electric vehicles (EV) cost far more than a traditional gas car or even a hybrid car.

“Even though we do see new electric cars that are going to be coming onto the market in the next few years, chances are it’s going to take several years before we see some truly affordable options that average consumers can buy,” he said.

The infrastructure for charging stations will also need to improve, and they would need to be spread across several locations and major cities across Canada, he added.

According to a Statistics Canada report, in the first six months of 2022, sales of fully-electric and plug-in hybrid vehicles made up just 7.2 per cent of new car registrations. For all of 2021, the proportion was 5.2 per cent.

According to Volpe, electric vehicles are also the most affected products in the current market because of semiconductor chip shortage.

“For obvious reasons, you need more semiconductors for vehicles that are electrified,” said Volpe.

But he believes that three years from now, every single lot in every city across Canada will have an electric vehicle option for consumers, but right now “a lot of people are despairing” because EVs aren’t available everywhere.

“We are going to see a dramatic shift in what’s available for people who want an electric vehicle in two or three years, and it’ll never go backward,” said Volpe.

Last week, Minister Steven Guilbeault proposed that one-fifth of all passenger cars, SUVs and trucks sold in Canada in 2026 will need to run on electricity under new regulations.

By 2030, the mandate will hit 60 per cent of all sales and by 2035, every passenger vehicle sold in Canada will need to be electric.

Buying a new car?

Prymak’s advice for consumers when buying a car is time investment. Plan ahead and order the car well in advance if you’re looking to buy new, he said.

“I would encourage consumers to order a car from the factory. That is the best way to get a fair price and not overpay with a heavy markup or… expensive add-ons,” said Prymak.

Another strategy is to get multiple quotes from different dealerships, he said. This will help give an idea of how much a car actually costs.

“Don’t just go to the closest dealership… assuming they’re going to give you a fair deal, because the dealership closest to you might, in fact, be the one that’s charging a lot of extra fees, charging a very large markup, or forcing you to pay for expensive extras,” he said.

“Take the deal from whichever one you feel is offering the (fairest) price, is the most professional and transparent with you, and shop that way,” Prymak said.

Buying a used car? May want to ‘wait’

Shawn Vording, vice-president of product and sales at Carfax Canada, told The Canadian Press in September that it’s important for consumers who are looking at the used car market to do their research and know the vehicle that they are considering.

“Make sure you know the car that you’re buying and so know the history hasn’t had an accident, has it been maintained, know the current condition, is it going to need tires and brakes in the next three months or has this car been reconditioned to a like-new status,” he said.

“If the price doesn’t make sense, there’s probably a reason why and so have an independent third party inspect the vehicle,” Vording added.

If a consumer is looking to finance a used car, Prymak expects that a higher interest rate on car loans is going to make it harder for consumers to afford the payments.

“That’s going to deter some buyers from the market,” he said.

Volpe’s advice, on the other hand, is to wait.

“If you can wait until the second half of 2023, the same car you want will be less expensive than if you wait until the second half of next year. Instead of buying a used car, you’re back in the new car market. Be the first owner and then get the options that you want,” he added.

 

 

Al-Hakim, A. (2022, December 30). Planning to buy a car in 2023? expectations will have to ‘change’, experts caution – national. Global News. Retrieved January 11, 2023, from https://globalnews.ca/news/9356719/canada-market-2023-planning-to-buy-a-car/

 

 

Austerity is a tough word to hear and ugly as a wide-ranging economic policy, but with interest rates rising and a looming recession, it may be time to take a cold hard look in your garage.

Given the high price of owning and driving a vehicle these days, now is a good time to reverse the long-running trend toward large, heavy, expensive and gadget-stuffed vehicles. The benefits will go well beyond saving money, but money’s not a bad place to start.

The average price of a new vehicle hit an all-time high in July: $55,000, according to AutoTrader. There are many reasons for this including high demand and low supply, owing to parts shortages. (And when automakers do get parts, they tend to use them on higher-end vehicles.) As a result, profits at car companies are up and some executives have said that even when supply-chain issues have been resolved, they plan to keep a lid on supply to keep prices afloat.

Used-car prices have dipped slightly, but the average price was still just shy of $38,000 in July, which is 32 per cent higher than at the same time in 2021.

Not only are cars expensive, but borrowing money to buy or lease one is now more expensive too, because the Bank of Canada keeps raising interest rates to keep inflation in check.

One-quarter of new vehicles in Canada are leased, while 57 per cent are financed, said Robert Karwel, senior manager at consumer research firm J.D. Power. Of those financing a new vehicle, 55 per cent of them are borrowing the money over seven or eight years.

“In Canada, monthly payment is king,” Karwel said. Stretching out the term keeps monthly payments lower – making bigger SUVs attainable. But now, with interest rates ranging from about 5 per cent to even 8 per cent on car loans, the cost of borrowing is adding thousands of dollars to the overall vehicle price. For instance, a $40,000 loan at 5 per cent paid monthly over seven years would cost $7,490 in interest. At 8 per cent over eight years, it would cost $14,285 – or an extra $6,795 for the same vehicle.

Terms have been getting longer too. Karwel said it may not be long until we see nine-year finance terms on new cars.

Once you’ve bought the car, you’ve got to run it, and drivers aren’t getting a break there, either. Gas prices are still hovering at about $1.70 a litre after smashing through the $2 barrier this past spring.

In other words, if you’re shopping for a car, it might be a good idea to think hard about what you actually need and consider downsizing. (Small cars can be both practical and fun to drive. My own family car for the summer months is a two-door 1991 BMW 3 Series that – okay, isn’t for everyone – but easily accommodates a baby seat, stroller, two adults and our stuff. Newer compact machines aren’t the penalty boxes they once were either. The latest Honda Civic hatchback, for example, is an incredibly well-rounded automobile.)

Of course, some drivers really do need huge cars. If you have three children, you’re going to want a three-row SUV or a minivan. If you’re a contractor, a full-size pickup may be necessary.

The high costs of car ownership will hit those in the lowest tax brackets the hardest, perhaps even pushing them out of the car market entirely.

But for most other people, buying something smaller and more frugal than the burly vehicles we have become accustomed to could pay dividends.

About 80 per cent of the new-vehicle market consists of SUVs and pickups. Not only are they more expensive to buy and run, but they can be more dangerous to pedestrians in the event of a collision. Bigger vehicles are dirtier too; Canadians drive some of the largest and most-polluting vehicles in the world, on average, according to a 2019 report by the International Energy Agency. So you could save money, save on gas, help the environment (a little) and perhaps even save a pedestrian by downsizing.

When gas prices peaked earlier this year, some dealers saw an influx of people looking to sell their gas-guzzling pickups. Drivers who really needed a truck surely kept them, but drivers who bought a hulking truck as a luxury lifestyle accessory understandably went looking for more economical alternatives.

The large, heavy, powerful and gadget-packed vehicles we have grown to love are – let’s be real – overkill for the vast majority of drivers.

Nevertheless, Karwel doesn’t think high interest rates and the growing cost of cars will reverse the trend toward bigger types of vehicles and longer finance terms.

“No one’s holding a gun to consumers’ heads when they’re buying these things. Vehicles are desire-driven purchases. We want nice things, and we want them well equipped,” Karwel said. Maybe we’re hopelessly addicted to excess.

 

Bubbers, M. (2022, December 13). That big, burly truck or SUV is killing it. your finances, that is. The Globe and Mail. Retrieved January 6, 2023, from https://www.theglobeandmail.com/drive/mobility/article-that-big-burly-truck-or-suv-is-killing-it-your-finances-that-is/

 

In terms of dollar volume retail sales, the automotive industry varied greatly at the end of the third quarter. Gasoline stations saw record retail sales on the back of the sharp increase in gasoline prices earlier in the year – a performance that is likely to drop in Q4 based on declines in gas prices in recent weeks. Following at a distance, automotive parts, accessories, and tire stores saw retail sales climb 10.8% above the already elevated levels seen in the same time last year as the aftermarket maintained its strong performance. New vehicle dealers saw retail sales climb a further 2.3% in the first three quarters of 2022, despite falling new vehicle sales, as vehicle price increases and strong performance at service departments help boost overall dealer performance.

Used vehicle dealers noticed a setback in terms of retail sales, with a decline of 6.5% at the end of the third quarter. Used vehicle prices have begun trending downwards in recent months after the 25+% gains seen in the past 2 years. As such, used vehicle dealers remained in good shape, with retail sales staying well above pre-pandemic levels. “When it comes to retail sales, different sections of the auto industry are seeing vastly different performance relative to the previous year” commented Andrew King, Managing Partner at DAC. He continued “However, from a broader perspective they remain largely ahead of pre-pandemic levels despite the uneven nature of the market this year.”

DAC produces forecasts of new vehicle sales, used vehicle sales, and aftermarket sales for more than 25 different product areas – both nationally and at a regional level across the country.

 

More information on these numbers can be found in the DesRosiers Automotive Reports published by DesRosiers Automotive Consultants Inc.

Copyright © 2022 DesRosiers Automotive Consultants Inc., All rights reserved.

Getting your hands on a new set of wheels won’t get easier anytime soon

Higher interest rates is the latest challenge facing car dealerships as they grapple with plenty of market hiccups since the pandemic. (Mark J. Terrill/The Associated Press)

After months of navigating supply chain and inventory issues in the new and used vehicle markets, Ontario car dealers are now dealing with another issue — the higher cost of borrowing.

The Bank of Canada has raised interest rates six times since March. Rates have shot up from 0.25 per cent to 3.75 per cent and the bank has warned Canadians, it’s not finished yet.

It means car dealers must grapple with yet another hurdle in an industry that has seen plenty since the pandemic, including the ongoing shortage of semi-conductors — the tiny chips that act like a car’s brains, calibrating everything from fuel injection, to anti-lock brakes, to infotainment systems.

The shortage has upended the vehicle market and driven up the price of used vehicles. Now some dealers say they’re worried rising interest rates may cause people to put off buying a new car as long as they can. 

‘It kind of panics people’

“Every time there’s a jump in the interest rate, it kind of panics people,” said Kamal Zabien, the owner of Cedar Auto, a used car dealership in London, Ont., who’s seen sales decline each time the prime rate creeps up. 

Zabien said the people who finance their cars are less likely to consider replacing their old ones because of higher interest rates. 

“Usually, our rates were five to six per cent, but now they’re eight or nine per cent,” he said. “I think it’s a shock right now.”

Light vehicle sales last month saw the lowest October sales figures in 13 years, according to the latest report from DesRosiers Automotive Consultants. The company said only 121,653 vehicles were sold across the country last month — a drop of 5.3 per cent nationwide, compared to a three per cent drop in Ontario. 

The latest sales report from DesRosiers Automotive Consultants shows Canadian light vehicle sales dipped 5.3 per cent nationwide in October. (DesRosiers Automotive Consultants)

“It’s been a pretty tough time to buy any car, used or new,” said Peter Frise, a University of Windsor automotive engineering professor and associate dean, who studies the vehicle sales market closely to inform the school’s research and development programs. 

He said if the decline in sales continues, it should force prices back down to Earth, especially in the used car market, where a surge in demand caused the price of many cars to be distended beyond their historical norms. 

“The price of 10-year-old used cars was not too far off what the price of those cars are brand new, which doesn’t make sense economically.”

“Make no mistake, the supply change is still a challenge. I think that it will recover,” he said. “We have interest rates going up, and that’s making affordability lower for consumers.”

‘I think it’s stabilized somewhat’

“As the supply of new cars increases, the supply of used cars will increase as well, and that will moderate prices, I think.”

Industry watchers say while interest rates will likely influence some people’s financial decisions at the dealership, it’s more likely to delay their decision than stop it altogether — because few things offer as much convenience as a car. (Nam Y. Huh/The Associated Press)

“I think it’s stabilized somewhat,” said Deborah Beauchamp, a 25-year veteran of the vehicle business who sells new and used cars at Oxford Dodge in London, Ont.

She said while delays still remain for specific makes and models, the wild peaks and valleys that defined the pandemic years are starting to iron themselves out as supply issues get resolved. 

While interest rates will likely influence some people’s financial decisions on the lot, she believes it’s more likely to delay their decision than stop it altogether — because few things offer as much ease and convenience as a car. 

“All in all, I think people are still pretty positive. Hopefully, it stays pretty consistent. Hopefully, our inventory levels keep going in the right direction.” 

 

Butler, C. (2022, November 22). Why getting your hands on a new set of wheels won’t get easier anytime soon | CBC News. CBCnews. Retrieved December 7, 2022, from https://www.cbc.ca/news/canada/london/car-dealers-1.6658937

 

An employee looks at a Volkswagen Beetle car during a ceremony marking the end of production of VW Beetle cars. VW Beetles ranked at the top of the Canadian Black Book’s 2022 Best Retained Value Awards. The fact Beetle was recently discontinued has made it a hot commodity. IMELDA MEDINA/REUTERS

Used cars are holding their value better than ever, according to Canadian Black Book’s 2022 Best Retained Value Awards. But, the situation is unlikely to last.

On average, 2019 model-year vehicles are today still worth 80 per cent of their original price, an all-time high, according to CBB, a Markham, Ont.-based company that provides vehicle valuations.

The firm’s Best Retained Value Awards are handed out annually to four-year-old vehicles that experience the least amount of depreciation. (It’s not to be confused with CBB’s Best Residual Value Awards, which forecasts the future values of new vehicles.) Some of this year’s category winners include the Toyota Tacoma pickup, Porsche Macan SUV, Mercedes A-Class, Ford Mustang and Subaru Crosstrek.

Short supply of used vehicles and strong demand helped retained values reach new heights, but they have likely peaked.

“Our anticipation is that, this year, retained values really reached their highest point,” said Daniel Ross, senior automotive analyst for valuations and residuals with Canadian Black Book. “We don’t really imagine [retained values] can go much higher than this anyway,” he added.

In 2019, four-year old vehicles retained just 52 per cent of their value on average, according to CBB data. That figure increased to 64 per cent in 2021, before jumping to 80 per cent this year.

For the first time since CBB began handing out its Retained Value Awards 15 years ago, some vehicles didn’t depreciate at all. Instead, they increased in value compared to their original manufacturer suggested retail prices (MSRPs). Four-year old Chevrolet Corvettes, Volkswagen Beetles and Ford Transit vans were all worth more in 2022 than they were when new.

In the case of the Beetle, the fact it was recently discontinued made it a hot commodity. “People know it’s not coming back; it’s an iconic name, and they wanted one of the last ones,” said Ross. In the case of the Corvette, short supply of the new model likely drove up prices of older models.

Varying supply levels between makes and models certainly played a role, but for the most part Ross said it was the well-known models with strongest reputations for reliability that retained the most value. Toyota and Porsche were the brands with the best overall retained value, while Hyundai, Mazda and Kia were on the most-improved list.

“There are economic variables developing that won’t make the used car market as strong as it has been,” said Ross, adding that the high cost of gas, rising interest rates, plus an increase in supply and a decline in demand should help bring used-car prices back down. “We believe this should be the peak for [retained] values,” he said.

In July, Autotrader noted the first downturn in used car prices, month-over-month, since January 2020.

In particular, prices of used full-size pickups and SUVs levelled off in spring, and have started to decrease in the last several months. On the flip side, values of used sub-compact and compact cars saw the most growth year-over-year, CBB data shows.

“The larger the car, the more suffering in terms of value it has had recently,” Ross explained. It’s a trend that suggests high fuel prices and rate hikes are starting to affect the types of vehicles Canadians are buying and selling.

Just don’t expect prices to suddenly hit rock bottom. “Nothing’s really going to go back to what it was prepandemic,” Ross said. “Three, four or five years out, values are still going to be above the point we were at before the pandemic.”

Here is the full list of CBB’s 2022 Best Retained Value Award category winners:

Car: Main

1. Volkswagen Beetle
2. Chevrolet Spark
3. Toyota Yaris

Car: Luxury

1. Mercedes Benz A-Class
2. Mercedes Benz CLA-Class
3. Mercedes Benz C- Class

Car: Prestige

1. Mercedes Benz CLS-Class
2. Porsche Panamera
3. Lexus LS

Sport Car: Main

1. Ford Mustang
2. Dodge Challenger
3. Mini Cooper

Sport Car: Luxury

1. Chevrolet Corvette
2. Porsche 911
3. Porsche 718 Cayman

Small Pickup

1. Toyota Tacoma
2. Ford Ranger
3. GMC Canyon

Full-Size Pickup

1. Chevrolet Silverado HD
2. GMC Sierra HD
3. RAM HD

SUV: Main Sub-Compact

1. Subaru Crosstrek
2. Nissan Kicks
3. Honda HR-V

SUV: Main Compact

1. Toyota Rav4
2. Subaru Forrester
3. Honda CR-V

SUV: Main Mid/Full

1. Toyota 4Runner
2. Jeep Wrangler
3. Toyota Highlander

SUV: Luxury Sub-Compact/Compact

1. Porsche Macan
2. Mercedes-Benz GLC-Class
3. Cadillac XT4

SUV: Luxury Mid/Full

1. Mercedes Benz GLE-Class
2. Porsche Cayenne
3. Lexus LX

ZEV Main

1. Nissan Leaf
2. Hyundai Ioniq EV
3. Chevrolet Bolt

ZEV Luxury

1. Audi e-tron
2. Jaguar I-Pace
3. BMW i3

Commercial Van

1. Ford Transit
2. Ford Transit Connect
3. Mercedes Benz Sprinter

Top of Form

 

Bubbers, M. (2022, November 21). The used cars with the highest retained value, including some that are worth more. The Globe and Mail. Retrieved November 22, 2022, from https://www.theglobeandmail.com/drive/article-the-used-cars-with-the-highest-retained-value-including-some-that-are/

 

The past 3 quarters of 2022 have been full of problems in the chip supplies and delays in production of vehicles and parts. The brands that will be able to succeed in this environment will be the ones dominating the market for new and used cars at the end of 2022 and beginning of 2023

This year has been unpredictable with significant year-over-year sales surges running back to back with disastrous quarterly declines across large swathes of the Canadian auto industry. Just look at the third-quarter for evidence: traditional Detroit vehicles enjoyed an 18-per-cent sales improvement compared with the same period in 2021, while Asian and European brands combined for a 28-per-cent nosedive.

We know that sales results in 2022 aren’t linked to demand, at least not in the traditional sense. Sales results — the real-world delivery of a vehicle to a customer — are driven by the ability to manufacture a vehicle. Or the lack thereof. And while the historic norm revolved around an automotive industry that built as many vehicles as possible, and incentivized to cope with any surplus, the automotive industry of 2022 is largely incapable of building enough vehicles to restore inventory at dealers.

The final list of Canada’s 10 best-selling vehicles during 2022’s first three-quarters is therefore very much a list that showcases which automakers are most-equipped to overcome a supply chain crisis. That doesn’t make it any less interesting than any other year, particularly given how much movement there’s been throughout much of the top 10.

10. Ford Escape: down 5 per cent in sales

Marginally outpacing the Jeep Wrangler for the final slot in the top 10, the Ford Escape is three spots ahead of where it was at this time one year ago. Don’t thank Q3. As much as the Ford brand had an outstanding summer (up 12 per cent in a market that was down 12 per cent), the Escape’s third-quarter 25-per-cent drop was an outlier.

9. Hyundai Elantra: down 1 per cent

The auto industry’s overall downturn, equal to 150,000 lost sales over the course of nine months, is nothing compared to the relatively tiny passenger car market’s loss of nearly 60,000 units. Cars account for only 18 per cent of the market, but they make up 39 per cent of the lost sales. Yet the Hyundai Elantra has essentially no part in all that. Elantra volume is steady at just over 2,200 units per month, on average, virtually on par with 2021 levels. The Elantra ranked 14th overall at this stage of 2021.

8. Honda CR-V: down 45 per cent

Bearing the brunt not only of an industry-wide shortfall of parts but also the production complications of a generational changeover, the Honda CR-V is shedding volume at a nearly unbelievable rate. Through the first nine months of 2021, Honda Canada had already reported 42,944 sales. Presently switching from the fifth to the sixth-generation CR-V, Honda is tracking toward its lowest-volume CR-V sales year since 2011.

7. Honda Civic: down 27 per cent

The Honda Civic has been Canada’s best-selling car in each of the last 24 years, but 2022’s outcome seems sorely in doubt. The Civic trails its traditional second fiddle by 2,621 units. The Civic was trailing at this stage of 2021, as well, but not by so significant a measure. Down 27 per cent this year, the Civic is emblematic of Honda’s overall predicament: brand-wide volume is down 32 per cent this year.

6. Toyota Corolla: down 21 per cent

On track to end 2022 as Canada’s best-selling passenger car for the first time ever, the Toyota Corolla is still on track to slow at the same precipitous rate as the car market overall. Fewer than one out of every five new vehicles sold in Canada are cars. Granted, the Corolla and Honda Civic account for one out of every four passenger cars sold this year.

5. GMC Sierra: down 9 per cent

Don’t let rising fuel prices stand in your way — pickup trucks are in control in Canada. Even the GMC Sierra, down 9 per cent through 2022’s first nine months, isn’t shedding sales as quickly as the industry at large. Indeed, third-quarter Sierra volume jumped 20 percent, a part of GM’s overall 28-per-cent uptick.

4. Chevrolet Silverado: up 1 per cent

Adding up Chevrolet’s total Silverado volume doesn’t exactly portray GM’s overall impact on Canada’s full-size pickup truck market. Combined, the Silverado and its GMC Sierra twin produced 80,849 sales during 2022’s first three-quarters, very nearly enough to catch Canada’s No.1 vehicle. But not quite.

3. Toyota RAV4: down 20 per cent

Narrowly holding onto a podium position after a third-quarter in which sales slid only 7 per cent, the Toyota RAV4 is a sure bet to finish 2022 as Canada’s best-selling SUV for a seventh consecutive year. The RAV4 actually outsold its top direct rival, the Honda CR-V, by more than two-to-one over the course of the summer.

2. Ram Pick Up: up 4 per cent

With 25 per cent of all full-size pickup sales in Canada, Ram’s truck line has grown its market share by nearly two points compared with the first nine months of 2021. To be fair, Ram has no hope of catching the top truck, besides the fact that GM’s truck twins easily outsell the Ram, as well. But in a market that’s suffered huge declines in 2022, Ram’s Stellantis parent company isn’t going to be disappointed with a 4-per-cent year-over-year increase in volume.

1. Ford F-Series: down 5 per cent

After a third-quarter in which Ford boosted F-Series sales by 16 per cent compared with 2021, this lead is locked in. It would take a small miracle for Ford’s rivals to sell 84,000 trucks in 2022, let alone enough vehicles to match Ford’s year-end total that will surely top 100,000 units for an 11th consecutive year. No other vehicle line in Canadian history has ever hit six digits.

 

Cain, T. (2022, October 26). Canada’s 10 best-selling vehicles in 2022’s first three-quarters | driving. Driving. Retrieved November 2, 2022, from https://driving.ca/column/driving-by-numbers/canadas-10-best-selling-vehicles-end-2022s-q3

Drop in price for used vehicles in Canada

 

According to Carpages.ca, used vehicle prices are on the decline across Canada, dropping more than six per cent after peaking during the first half of this year.

The data suggests some types of vehicles are seeing steeper drops than others — sedans the most, minivans the least.

However, according to Tim Dimopolos (CityNews Automotive Specialist) the change is minimum.

“I’ve seen various studies that show a downward trend, but that downward trend is pretty minute,” he said. “The market is still very high comparative to pre-pandemic levels.”

The decline is being attributed to drivers putting off purchases due to large interest rates and the global chips shortage being resolved. The production of new vehicles has increased and people that are interested in a new vehicle are placing orders even if they have to wait for their arrival.

In the other hand, customers in need of a vehicle preferred to go to used car dealers to expedite the process. This is one of the reasons why the change on prices for used car dealers are not that significant.

“Pre-owned sedans have experienced the largest drop in average price point. Between June and July, the average Carpages.ca listing price for a used sedan dipped 6% from the first two quarters of the year, from $30,475 to $28,553,” reads the report from Carpages.ca

“Meanwhile, the average cost of a used pickup truck and SUV both dropped by only about 2% in the same time frame. The average price of a used pickup truck decreased from $42,684 to $42,042, and the average price of a used SUV dipped from $35,159 to $34,303. Minivans, however, declined the least in price at the turn of the third quarter, seeing only a 1% drop in average price ($36,850 from $37,266).”

But these changes are not as impressive as the increase in used cars prices since 2020. The report finds pickup trucks still cost 35 per cent more than they did in the first two quarters of 2020, SUVs cost 43 per cent more, sedans cost 51 per cent more, and those family-toting minivans cost a whopping 93 per cent more.

“And the most expensive category, from the research is older stock. Cars five years and older have seen the greatest appreciation through the pandemic. So that $5,000 or $8,000 car, you’ve seen very sharp increases in prices there. They are very expensive and they are hard to find.” Dimopolos commented 

 

 

 

Lloyd, M. (n.d.). Canadian used car prices beginning to drop: report. CityNews. Retrieved October 14, 2022, from https://vancouver.citynews.ca/2022/09/15/used-car-prices-dropping-report/